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Who Gets Retirement Benefits In A Texas Divorce?

Division of property is a complicated issue under the circumstances of a divorce, not to mention when the property being divided is retirement benefits. So who gets retirement benefits in a divorce? Let’s see.

Article published by the Texas Divorce Attorneys (832) 410-8935.

Assuming there is no prenuptial agreement, here is a breakdown of how division may occur.

What are Considered Retirement Benefits?

In order to discuss the division of retirement benefits, it is first beneficial to know what exactly is considered a retirement benefit. Retirement benefits are: 401(k) accounts, deferred compensation accounts, individual retirement accounts (IRA), and other retirement savings plans.

How are Retirement Accounts Characterized?

Like other property, the characterization of retirement accounts depends on whether the contributions by either spouse were made before or after the marriage. Consequently, all contributions made to the retirement account made before the marriage are considered separate property of the spouse who made the contributions. Similarly, all contributions made to the retirement account by either spouse are considered community property (See Community Property vs. Separate Property in TX Article). 

It is irrelevant whose name is on the account at the time of contribution or division.

Note, courts value each retirement plan at the date of the divorce instead of valuing the retirement plan at its actual value.

Who gets the Retirement Benefits in a Divorce?

After understanding what counts as retirement benefits and how these benefits are classified, the question can then be answered—who gets the retirement benefits in a divorce? Well, it depends. Generally, it is proper to consider two main factors, at what time were the benefits acquired (before or after marriage) and what contributions did each spouse make to the retirement benefits?

Once these two questions are answered, then it would be clear to determine what each spouse will receive.

Multi-state Retirement Benefits

Many times, married couples will move from state to state throughout their marriage. Texas courts will determine the character of the retirement benefits in accordance with the laws of the state or residence at the time the retirement benefits are accrued.

Let’s illustrate this with an example. Suppose a couple lives in a state that is a common law state (different than Texas) for five years during the marriage. The retirement benefits accrued during those five years will be classified under the laws of the common law state instead of the “just and right” division that is applied under Texas jurisdiction courts.